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Global talent trends 
and the role of 
Peter Cosgrove 
October 2014
Global trends in Recruitment Agencies and best practice examples 
What has been the most under-managed corpo...
 New markets: When employers move into new territories they use recruitment 
agencies not only to hire the talent but als...
freelance work. These arrangements may be particularly attractive to those seeking 
a better work-life balance or those wi...
and candidates as the place to go. As Greg Savage, a prominent industry blogger, often says 
“whoever owns the talent, wil...
Labour Mobility 
Better labour mobility is needed world-wide given excessively high unemployment in some 
countries with s...
 Many of these trends are coming about because of advances in technology. Sites 
such as elance-oDesk enable freelancers ...
there will be much stronger regulation around recruitment agencies to ensure that 
employees are being treated fairly at a...
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Global talent trends and the role of Recruitment agencies

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Global trends in Recruitment 2014

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Global talent trends and the role of Recruitment agencies

  1. 1. Global talent trends and the role of Recruitment agencies Peter Cosgrove October 2014
  2. 2. Global trends in Recruitment Agencies and best practice examples Introduction What has been the most under-managed corporate asset of the past two decades? According to McKinsey’s War for Talent survey, it has never been more challenging to identify the best talent. There’s an ever increasing need for technical skills, a move to non– permanent jobs and a desire among employees to work from home. So with all these changes, how are CEOs and recruiters managing future talent? Where do they find the bes t people, how do they do it and how will recruitment agencies assist and support the industry? The Recruitment Agency Marketplace The recruitment agency market is growing. While practices may somewhat differ across the world, the expectation is that all sectors will continue to grow. Here are some key statistics on the sector from the latest Ciett information in 2013:  The Global revenue of recruitment agencies is over 350 billion dollars  Europe has the largest share of the market (37%), followed by the USA (29%) and then Japan (17%)  There are over 200,000 recruitment agency branches across the globe employing over 620,000 employees  Agency workers will fill circa 13 million jobs in 2014  The world average penetration rate for agency work is still at 0.9% and staying relatively stable  Agencies help over 12 million young people enter the labour market  The top three global recruitment agencies worldwide are Adecco, Rands tad and Manpower. Why employers use recruitment agencies The main reasons employers use agencies can be summarised as the following:  To unearth hidden talent: many employers use recruitment agencies to find them talent that they are unable to find themselves. With so much emphasis being placed on the importance of talent within the organisation, this is seen as a key competitive advantage.  To save them time in hiring: many employers may have the capability to hire but given the volumes and challenges related e.g. assessment, visa and sponsorship issues, they would prefer to have an intermediary manage this for them.  Brand challenges: Many employers have an unrecognised brand or potentially not a strong positive image and they use agencies to help sell their message and their brand in a positive manner. This ensures more potential hires do not say no at the outset based on perceptions of the organisation. This is becoming a bigger issue as more stories are relayed by employees about the companies that they work for.
  3. 3.  New markets: When employers move into new territories they use recruitment agencies not only to hire the talent but also to give them advice on labour laws, salary bands and other employment related matters. Why do jobseekers use recruitment agencies  Opportunities: It gives them access to multiple opportunities as opposed to one opportunity with one company, many employees look at it as a good way to begin a job search where they may just want to understand more about the current marketplace.  Advice: They can provide advice and assistance in obtaining employment often by counselling employees on what they need to do to be successful.  Flexibility: It can provide flexibility both in hours, location and duration of employment, or it can provide them with access to the labour market that they might otherwise not have. For many, flexible working is now a choice that they want as more employees opt out of permanent work for temporary work. Agency work as a predictor of economic recovery and an increase in jobs. Agency work is the term given to non – permanent work through a recruitment agency. In times of economic recovery agency work is often the first employment that companies turn to. There has been a direct correlation in the last few years between GDP growth and the number of hours of agency work which is why Ciett highlights that agency work is a leading economic indicator. The other key point is that in the 2013 Ciett survey it highlighted that 62% of agency jobs would not have been created if corporates did not have access to agency work. Companies are often reticent to hire permanent workers if an agency worker is not available so agency work certainly promotes job creation due to its greater flexibility. The Talent challenges There is a growing mismatch happening between the skill-sets in demand and those looking for work. 23 million people in Europe are under-employed yet job vacancies are on the rise, that number world-wide is estimated at 202 million people under-employed. McKinsey have predicted that there will be a shortfall of 16 million college educated workers by 2020. The global trends all point to an older workforce, less people having families and a general worldwide decline in the population. Here are some major talent challenges:  Ageing Workforce: There is a rapidly ageing workforce with many countries not looking into strategies for upskilling the older workforce. Norway and Japan as much out of necessity, are leading the way while countries like France are facing huge challenges down the line.  Technology will bring about a shift from a more permanent, lifetime job towards less permanent, non-standard employment relationships, such as self-employment and
  4. 4. freelance work. These arrangements may be particularly attractive to those seeking a better work-life balance or those with disabilities. Many companies are not yet up for these challenges.  Millennials are expected to make up 75% of the global workforce by 2030. Their dominance will ensure a vital role in defining the culture of the future workplace. Millennials are the generation born between 1980 and 2000. One of their most defining characteristics is their affinity with technology. For them, instant access to information, smartphones, laptops are the norm. This generation place more emphasis on their personal needs than on those of the organisation.  The move towards permanent flexibility: Traditionally employers have increased their use of contract and temporary staff during a recession and then as the economy recovers they move back towards permanent headcount. However, the prospect of longer term economic uncertainty appears to be changing employer behaviour. In the US, which is generally seen as a lead indicator of the recruitment marketplace, when the economy began to recover in 2012 the incidence of temporary and contract recruiting was far higher than ever before. For recruitment agencies to survive or thrive The future challenge will be less about “finding” candidates and more about building networks. One of the key challenges for recruitment agencies will be corporates building up in-house recruitment teams to own their own recruitment. Job boards, LinkedIn and corporate recruiters have all been highlighted as reasons for the death of the recruitment agent. But the industry is alive and well, thriving in fact, and there are very good reasons for this:  Talent is not a commodity: Unlike other things you can procure, talent has a voice and an influence, it is complex, like any human individual. The services of recruitment agencies involve much more than providing CVs. If that’s all an agency does, it will struggle to survive.  Social media is not a replacement: Tools such as LinkedIn and job boards, while very useful, will never completely replace recruitment agencies; they only give you a list of candidates; you cannot identify the right candidate by this means alone.  Good business sense: Commercially, it will always make sense for companies to use recruitment agencies. Their service is generally free until you hire (no hourly charges like many professional services).  Added value: Agencies can offer professional advice on the marketplace, informing clients how their brand is perceived and investigating the availability of talent.  Candidate’s perspective: From a candidate’s point of view, they may not want to apply directly to the competition; they may prefer a third party to contact them on their behalf.  International support: huge support to employers looking to recruit overseas. Recruitment agencies will need to specialise to a greater degree if they’re to continue adding value. They will need to demonstrate it online and promote themselves to clients
  5. 5. and candidates as the place to go. As Greg Savage, a prominent industry blogger, often says “whoever owns the talent, will own the market”. Case Study, how finding candidates is going online Hard Rock Café Firenze fills all positions using Facebook alone The Hard Rock Café in Florence needed to hire 120 staff for its new store opening. They recognised that their consumers and candidates were often the same person, so they launched a Facebook campaign that allowed candidates to submit applications via Facebook. They also ran Facebook ads targeting people around Florence who showed an interest (liked) rock and roll bands. The page grew to over 6,000 in 4 days (bearing in mind that some companies take years to reach 5,000). The Hard Rock team also responded to applicant questions within Facebook. The campaign led to 4,000 applicants and all 120 were hired through the app. It was not just incredibly quick, it was very cost effective. Also, because they targeted candidates who were passionate about the Hard Rock brand, they had a 95% offer success rate. The future of sourcing candidates will more and more through online channels. The phrase “inch wide mile deep” will become more relevant as companies use agencies who have a deep specialisation in their area and know not just the local market, but the international market. The major challenge for the industry will still be the recruitment agency brand. In many countries, there is still a very negative connotation of a recruitment agency as it is linked to forced labour and unregulated practices. Much work is currently being done on this but this will continue to be a huge challenge. Bi-lateral agreements, while very challenging to put in place are one of the most influential ways towards better regulation between countries. Disrupters to the global agency marketplace One of the biggest disrupters of the agency market is the new online staffing models. These are models based on the fact that people can work from anywhere and they take assignments across the globe using an online staffing site such as elance-oDesk or freelancer. Much has been made of how organisations will change with all the technological advances and it is happening. More and more people are working on assignments on an output basis through these sites and can be working on an assignment from anywhere in the world. While this opens up talent to the entire world, it will prove a key disrupter for recruitment agencies. The online staffing models market share, according to Staffing Industry Analysts is currently 1.6 billion dollars and conservative estimates reckon that the market will grow to around 30 billion dollars by 2020. One of the key drivers for this is the access to technology and that everyone is connected so it is much easier to assess and hire virtually.
  6. 6. Labour Mobility Better labour mobility is needed world-wide given excessively high unemployment in some countries with skill shortages in others. The challenge is that anti-immigration sentiment is growing in some countries so it is critical to make the idea of labour mobility and migration of labour a win-win solution for countries and future employees. For ASEAN countries, better labour mobility will need a review of some constitutional and legal objections to employing foreigners. Labour mobility benefits both the county of origin and the new country. The former can increase remittances into that country and for the latter, increased competitiveness. The World Bank estimates that 549 billion dollars is sent in international remittances, the largest country being India (71 billion), followed by China (61 billion). There are also some negative connotations with migration of labour, with migrants being exploited at the hands of traffickers or employment agencies. According to the World Bank, migrants are sometimes charged excessive commissions for recruitment services when changing money or when sending money back home. It is clear in the long term that more international migration from third world countries and greater mobility in the EU remain the only possible answer to future mismatches between supply and demand of labour and skill. Therefore, future migration and integration policies need to be aimed at reducing the direct and indirect costs of migration. A further challenge is that even when there is easier regulation on migration of labour, this does not immediately mean that the visa process is simple. One of the common complaints is that visa processes are time consuming, bureaucratic and costly which can be a further prohibitor. Future trends – where is it all going? We are seeing an irreversible trend from permanent workforces to more temporary and contracted positions.  It has been forecast that up to 40% of the global workforce could be freelancers by 2020. Much of the outsourcing that is taking place is around flexible or contingent talent, a fact which companies will need to bear in mind, as more of their workforce moves to non-permanent roles.  This trend could lead to the outsourcing of recruitment functions which can help drive down recruitment costs. A word of warning though; while it’s good to get value for money, do you really want cost to be the most important factor in the acquisition and negotiation of your number one asset? Companies are hiring talent from a global network on the understanding that they may never meet their employees face-to-face.
  7. 7.  Many of these trends are coming about because of advances in technology. Sites such as elance-oDesk enable freelancers to make money from their talents, by connecting them online with companies. In this way, technology is making it simpler to link employers with employees. This will fundamentally shift the way we do work. Bring the work to the worker instead of the worker to the work  Currently, many workers cannot enter the workforce because they have to stay at home due to childcare commitments, a long term disability, or becaus e they’ve been out of work for a long time and are perceived as unsuitable. In circumstances however, where the only requirement is the completion of a particular task within a given timeframe, many people who are currently not working could find a regular earnings stream. Such new ways of working will make more talent available to companies; they just need to be open to it.  Access to newer ways of finding talent e.g. professional networking sites such as Linkedin, does not necessarily help time efficiency as the to and fro nature of the communication does not meet the timelines of the corporate. The rapid change of the jobs of the future  Skill-sets of the future: with such rapid technological innovation employers are finding it increasingly difficult to predict the skill-sets of the future. Roles like “data scientists” did not exist five years ago for example. Intel highlighted last year that 80% of its current revenue comes from products that did not exist two years ago.  Millennial Generation: known as the generation of digital natives, for whom the internet has always been there. The view is that they will be much more radical and will reject traditional employment contracts favouring contract or freelance options .  Your home-grown workforce: even in countries where the home grown talent is strong and the education remains a huge focus, the challenges will come from other countries who, more and more will be looking to hire the top talent wherever they exist around the world. With the ability to work from anywhere becoming more prevalent, talent will be accessible from anywhere in the world which can be an opportunity but also a threat. Changes to labour mobility  More and more companies will see the importance of an efficient labour market and while we are not seeing it yet, more countries will make the access to migrating talent an easier proposition within their country. Currently, there is still much mis-trust and fear around this but the demographics don’t lie and it will become a necessity. Labour migration will also bring benefits to the migrants themselves in terms of higher wages and opportunities to acquire to gain new skills. Alongside this
  8. 8. there will be much stronger regulation around recruitment agencies to ensure that employees are being treated fairly at all times. Conclusion Here is a summary of the top priorities for recruitment agencies and for employers if they are to survive the talent challenges in the future: Recruitment Agencies 1. Specialisation: it will be critical to be a specialist in a specific geography, a specific technology or a specific sector to thrive. Companies will look to find the talent themselves and will only be using agencies when they know more about the marketplace and where to unearth the talent. 2. Networks: as more candidates become available online it will be much more about building the relationship with communities of candidates to source them for future roles. It will be these connections that will be more valued by corporates looking for their services. 3. Candidate experience: the experience a candidate has with an agency will be more important than ever, given their ability to let the world know through social channels about that experience. With more people trusting the views of their colleagues and peers over advertising, it is critical to get this right regardless of how many applications you need to handle on a daily basis. 4. Keep up to date with the technology: while technology will not take the place of recruitment agencies, it will certainly disrupt the market and it will be important that agencies continue to evolve their service by utilising the newest technologies. 5. Look at the future: all the challenges in terms of technology, flexible working, globalisation need to be looked on as opportunities to get into new markets and geographies. Corporates 1. Understand what your brand says. There’s little point identifying the top 100 people for your company if 99 of them don’t want to join you. What matters is not what you say, but what others say about you. Ask yourself if you would be inspired to join your own company or if you would refer others to work there. 2. Appreciate the importance of social media in attracting future talent. Be clear on what you want to achieve and dedicate resources to it, only then will it become more powerful. 3. Ensure your recruiters are part data scientists and part sales people; they need to understand how to find candidates amid the vast amount of data, but they also need to be able to sell them the opportunity. 4. Understand the importance of creativity and new ideas. These will differentiate your company from the competition. Are you clear on how you are getting the best out of your current staff? 5. If your talent is the number one reason you will succeed, re-think the role of procurement that says you must get the lowest possible price from all recruitment partners. Talent is not a commodity but there is a right price.